New Jersey Assembly Bill A4473

New Jersey 2024-2025 Regular Session

• Introduced: 6/3/24
• Refer: 6/3/24
• Refer: 6/24/24
• Report Pass: 9/12/24
• Engrossed: 9/26/24
• Refer: 9/30/24

Caption

Eliminates statute of limitations on income tax assessments that arise out of erroneous refunds induced by fraud.

Impact

If enacted, A4473 would allow the New Jersey Division of Taxation to issue assessments for any fraudulent refunds at any time, removing the five-year limitation currently imposed under certain conditions. This change aims to create a uniform standard where any fraudulent activity, regardless of whether it leads to a tax refund, can be scrutinized and addressed without time constraints. By aligning the treatment of false returns that result in additional tax liabilities with those resulting in refunds, lawmakers hope to enhance tax compliance and prevent abuse of the system.

Summary

Assembly Bill A4473 introduced in New Jersey seeks to amend the state's Gross Income Tax Act by eliminating the statute of limitations on income tax assessments that arise from erroneous refunds induced by fraud. Under current law, there is a three-year limit on tax assessments after a taxpayer files a return, which does not apply if the return is deemed fraudulent. However, the bill resolves an inconsistency regarding time frames for assessing erroneous refunds linked to fraudulent behavior. Currently, a fraudulent return yielding a refund is assessed within a five-year window, leading to potential discrepancies in enforcement.

Contention

However, the bill may face opposition due to concerns surrounding taxpayer rights and the potential for increased scrutiny on individuals by tax authorities. Critics argue that the removal of the statute of limitations could enable excessive and prolonged investigations into past tax filings and refunds, leading to a burden on taxpayers who may face unending audits. Supporters claim that the bill is necessary to deter fraudulent tax practices that can significantly harm state revenues and public trust in the tax system.